Aged care planning basics: costs and Age Pension
Aged care planning involves care needs, possible fees, accommodation and the way income and assets are assessed. These rules differ from the Age Pension means tests. Use this guide to identify questions for My Aged Care, Services Australia and appropriately qualified advisers.
What usually changes when aged care enters the picture.
- The home is assessed under different rules for the Age Pension and residential aged care costs. For aged care, a partner, dependent child or qualifying carer or close relative living there may affect whether it is counted. Check the aged care home rules.
- Aged care has its own means assessment. Some costs depend on income and assets; others depend on the services and accommodation you choose. An Age Pension estimate alone cannot calculate your aged care fees. See how aged care costs are assessed.
- Accommodation can be paid as a refundable lump sum, daily payments or a combination, depending on your arrangements. A refundable lump sum is exempt from the Age Pension means test but counted in the aged care means assessment. Retention and deduction rules can reduce the amount refunded. Read the accommodation payment rules.
- Support at Home replaced Home Care Packages and Short-Term Restorative Care on 1 November 2025. Contributions depend on your services, financial assessment and approval history. People receiving or approved for a Home Care Package on or before 12 September 2024 have no-worse-off contribution protections. Read about Support at Home contributions.
- From 1 October 2026, approved personal care services under Support at Home, such as help with showering or dressing, have no participant contribution when they are in your support plan and sufficient funding is available in your budget. Contributions may still apply to other services. Read the October 2026 change.
Which residential aged care fee rules apply?
For new entrants from 1 November 2025, the current arrangements can include a basic daily fee, a hotelling contribution, a non-clinical care contribution and accommodation costs. An optional higher everyday living fee may apply for agreed extra services.
People already in permanent residential care before 1 November 2025 generally retain their existing fee arrangements unless they opt in. People receiving a Home Care Package, or approved and waiting for one, on or before 12 September 2024 generally use the 1 July 2014 care-fee arrangements when they later enter residential care. Accommodation rules also depend on entry date, so check these separately.
Existing arrangements do not freeze dollar amounts: indexation and changes in your circumstances can change what you pay. Check current residential fees and no-worse-off protections.
Aged care questions people often bring to Pension Pilot.
Does aged care affect my Age Pension?
It can. A home generally remains exempt from the pension assets test while your partner lives there. If you leave it to enter care, a two-year exemption can apply, with exceptions for some circumstances. These pension rules are separate from the aged care means assessment. Check the pension home-exemption rules.
Is RAD or DAP better for my situation?
Compare cash flow, your partner’s needs and both means assessments. Daily accommodation payments are not refundable. For people first entering residential care on or after 1 November 2025, RAD/RAC retention is generally calculated at 2% a year on the daily balance for up to five years. Confirm your entry-date rules and get independent advice.
Where should I start?
Start with My Aged Care to explore support and arrange an assessment of your care needs. Use the official fee estimators for a guide, then obtain your aged care means assessment and fee advice from Services Australia or DVA as applicable. A retirement estimate can help with your wider budget.
Guidance checked against the official sources linked on this page on 9 October 2026. Rules and individual assessments can change.
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